Legal Insights

Environmental claims and sustainability

By Joshua Same, Libby Walker

• 07 February 2024 • 5 min read
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In 2023 the ACCC continued its focus on false or misleading environmental and sustainability claims, or ‘greenwashing’. This focus saw the ACCC issuing guidance on greenwashing as part of its educational role and, on the compliance front, the ACCC obtaining an enforceable undertaking on packaging marketed as being made from plastic waste collected from the ocean. These developments are an important reminder for all businesses to substantiate any environmental claims on their packaging or in other marketing materials with credible evidence.

2023 enforcement priorities

We saw far less public enforcement activity in 2023 than expected, especially considering the ACCC had expanded its compliance and enforcement priority regarding environmental claims and sustainability to include product safety and competition concerns, as well as consumer and fair-trading matters. In that regard:

  • in March, the ACCC published the findings of its ‘internet sweep’ of environmental claims completed at the end of October 2022, which it says led to several investigations of greenwashing across several sectors and the establishment of the Sustainability Taskforce
  • in a June submission to the Senate Inquiry into Greenwashing, the ACCC drew attention to the limits of its abilities under the ACL to deal with greenwashing. These difficulties were summarised in its 2023–23 Annual Report, where the ACCC said:
Failure to achieve the target of the number of enforcement interventions in the period is partially attributable to the complexity of many matters being investigated. In particular, the issues arising in matters under our environmental claims and sustainability priority area can be incredibly involved, and they can be intertwined with many policy issues and technical complexities.

As we mentioned earlier in this report, this lower level of public enforcement activity is reflective of a new approach by the ACCC under its (relatively) new Chair, Ms Cass-Gottlieb. The ACCC’s success rate in this area is also somewhat chequered, as we have observed previously on the ACCC’s unsuccessful prosecution of Kimberly-Clark for ‘flushable’ wet wipes and Woolworths for ‘biodegradable and compostable’ disposable crockery.

Major developments and activities

Representations and packaging

The ACCC’s 2023 highlight in this area was the enforceable undertaking it obtained from MOO in November. MOO manufactures and supplies yoghurt products sold in supermarkets and convenience stores. Between 2021 and 2023, MOO published statements on its website, social media and products that its yoghurt packaging was made from ‘100% ocean plastic’. In fact, the packaging was made from plastic waste collected within 50km of the shoreline in places with non-existent or inefficient waste management practices.

Statements on the packaging, in smaller font than the headline, included statements such as, ‘Our tub and lids are made from 100% Ocean Bound Plastic’ and ‘*This yoghurt tub and lid are made from 100% reclaimed Ocean Bound Plastic’. The ACCC considered that these statements were insufficient to overcome the impression that the packaging was made from plastic waste collected directly from the ocean.

In the undertaking, MOO admitted that its conduct was likely to have contravened the ACL and undertook to:

  • publish a corrective notice;
  • update the packaging design of its yoghurt products to stop making the ocean plastic representations and conduct a comprehensive review of MOO’s website and social media platforms to ensure all ‘ocean plastic’ claims are removed;
  • conduct internal audits relating to the nature and location of the ‘ocean bound plastic’ resin used in MOO’s yoghurt product packaging; and
  • establish and implement a compliance program.

We are aware of similar matters where the ACCC has issued substantiation notices targeting claims that packaging is recycled or recyclable and required several manufacturers and wholesalers to update their marketing material to clarify such claims where they are arguably not 100% true.

"Once a consumer has had their trust broken by a misleading green claim, this, understandably, has a significant impact on their likelihood to trust these claims again. The ACCC understands that increasingly more consumers are walking away from relying on environmental claims because this trust has been broken."

ACCC Deputy Chair, Catrina Lowe

Greenwashing litigation

Although we are aware, including through the experience of our clients, that investigations by the ACCC are underway, the ACCC did not commence any formal court proceedings in this area last year. By comparison, ASIC commenced proceedings for greenwashing against Mercer Super, Active Super and Vanguard Investments Australia.

"We reviewed 247 businesses across a range of targeted sectors and from this, found that 57 per cent of businesses made potentially misleading environmental or sustainability claims."

ACCC Deputy Chair, Catrina Lowe

Looking ahead

There is increasing attention by regulators, investors and stakeholders on sustainability-related reporting and disclosure and the ACCC is no exception. Combatting greenwashing is set to be a continuing priority in 2024. As such, when seeking to appeal to consumers’ desire for environmentally conscious products and services, businesses will need to ensure their representations do not overreach and are backed up by reliable evidence. The cosmetic, fashion and food and beverage sectors in particular are in the ACCC’s sights with the highest proportion of concerning claims and may see increased compliance activity. Given the limitations of the ACL and the ACCC’s new focus on prosecuting only serious misconduct, we don’t expect many new cases but there may well be more infringement notices and other administrative solutions. Ultimately, if the ACCC doesn’t see the changes that it desires, then there it will likely call for more regulation to specifically target greenwashing in consumer products.

Read more from ACCC Year in Review

We look at the ACCC’s leading cases and other policy and regulatory activities throughout the year and then evaluate how well the ACCC performed against its ongoing enforcement priorities.

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